Europe’s Cheap Borrowing Costs Lure Corporate Fundraising

Borrowing costs in Europe have fallen against dollar rates, to near half in some cases, and Bloomberg anticipates US firms to issue more bonds in euros. “Apple Inc. (AAPL), Verizon Communications Inc. and Albemarle Corp. led 68 billion euros ($83 billion) of bond issuance by American borrowers this year, the busiest since 2007 and 45 percent higher than 2013, according to data compiled by Bloomberg,” report Sally Bakewell and Cordell Eddings. They point out that the “average yield investors demand to hold investment-grade corporate bonds in euros is 2.11 percentage points less than comparable dollar-denominated notes.” Analysts expect that the US Federal Reserve could start allowing interest rates to rise even as the European Central Bank could start a round of quantitative easing with government bond purchases to insert more money into markets and encourage growth. Europe, unlike Japan and the United States, is a latecomer in trying quantitative easing. – YaleGlobal